SHANGHAI, Nov 14 (SMM) – The Chinese zinc market is likely to receive less support from fewer seaborne material inflows, which would keep domestic inventories at low levels, SMM expects.
Low stocks in the market have bolstered prices of Chinese zinc. This is supportive of zinc prices which are set to fall in the long run on concentrate supply growth.
While seaborne arrivals are likely to boom in November-December after an open import arbitrage window in August-September generated shipments, zinc imports are unlikely to see substantial growth in the fourth quarter of 2018 given a high base a year earlier and as a major refined zinc smelter in South Korea suspended output in August for environmental reasons, which would reduce imports from the country.
SMM estimates China’s imports of zinc ingot in 2018 to fall some 15% from 2017.
As growth of domestic zinc supplies face bottlenecks, refined zinc inventories are unlikely to see substantial gains in near term without large inflows of seaborne materials. This is expected to slow the fall in zinc prices.
Zinc imports from South Korea and Australia expanded to 50% of the total imports after China inked a free trade agreement with them in 2015, exempting 0# zinc ingot from import tariffs.